Full Market Report - MacKenzie Commercial Real Estate

Transcription

THIRD QUARTER | 2014
MacKenzie Market Report
Office Market
www.mackenziecommercial.com
BALTIMORE oFFICE oVERVIEW
Regional Office Market Turns the Corner in Q3
Presented by Anirban Basu, Sage Policy Group, Inc.
Historical Vacancy Rates
As followers of the local economy know, Maryland has emerged as
an economic laggard. The state’s unemployment rate is now 0.3
percentage points above the national average. Three years ago,
Maryland’s unemployment rate was 1.5 percent below the national
average and the state could boast of its resilience during the Great
Recession. No more. Recently released gross state product data
indicate that Maryland’s economy failed to expand last year even
as national output expanded nearly 2 percent. Maryland’s ranked
49th in the nation in terms of gross state product expansion, ahead
of only Alaska’s more volatile and much smaller economy. Over the
past twelve months, Maryland ranks 44th among the 50 U.S. states
in terms of percentage job growth – 45th if one includes the District of
Columbia.
That said, to the extent that there has been evidence of growth in
Maryland, it has generally taken place in the Baltimore metropolitan
area, also home to the best baseball and football in the region.
According to the Bureau of Labor Statistics, the Baltimore region added 24,600 jobs between August 2013 and August 2014, which
represents 1.9 percent employment growth, precisely the rate of growth observed nationally for the same period.
Not surprisingly, the Baltimore region’s office market has emerged as one of Maryland’s more respectable economic stories,
though hardly a fabulous one. During the third quarter of 2014, net absorption totaled 63,722 square feet (sf) regionally. It was a
tale of two submarkets, however, with Baltimore City + City Center sustaining -96,728 sf of net absorption, and suburban markets
tallying 160,450 sf of positive net absorption. Vacancy in City Center stands at 18.2 percent, while suburban vacancy stands at
14.6 percent. The best submarket performer on a quarterly basis was the I-83 Corridor, which net absorbed nearly 113,000 sf.
Year-to-date, that market has net absorbed nearly 189,000 sf, ranking second to regional leader Columbia (+244,898 sf).
Quick Stats
14.75%
20.00%
63,722
The overall direct vacancy rate for
the Baltimore MSA remained virtually
unchanged, decreasing a mere 0.2 percent
from 14.77 percent in the second quarter
of 2014 to 14.75 percent in the third.
Reductions in the Baltimore County East and
I-83 Corridor were offset by an notable 2.32
percent increase in the Annapolis market
from 12.90 percent to 15.22 percent.
Strong absorption over the traditionally slow
summer months helped boost year to date
absorption to a total of 364,803 sf. This
absorption number does not include owneroccupied absorption that has occurred over
the course of the year which has contributed
more than an additional 350,000 sf of space
absorbed by companies consolidating into a
single tenant location.
Vacancy Rate
Vacancy
Absorption
Rate
$22.04
Avg. Rental Rate
Average rental rates for the region have
remained steady with the exception of the
Class A+ submarket in Baltimore's City
Center which saw a $2.73 psf increase
from an average $25.48 psf to $28.21 psf.
Overall, the region saw a $0.08 percent
increase from the second quarter to $22.04
marking a $0.27 decrease from the same
period one year ago.
* All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions,
or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon. Portions of the base statistics are from CoStar Property data. Data as of 3/2014.
Absorption/Vacancy Rates
Northern Metro
Downtown
Vacancy Rates %
Absorption Rates
Southern Metro
The Harford County submarket continues to struggle with a vacancy rate in
the mid-twenties while neighboring submarket Baltimore County East saw
a 1.73 percent decrease in vacancy over the quarter. The Southern Metro
market remain statistically unchanged even as the Annapolis and Route
2 Corridor submarkets experienced increases in vacancy rates. Class A+
product in the City Center has dipped below a healthy 10 percent to 9.12
percent.
Rental Rate/Vacancy Rates
Northern Metro
Downtown
Vacancy Rates %
Rental Rates
Southern Metro
Average rental rates remained consistent with any notable increases in
the individual submarkets offsetting losing in others. Class A+ product in
Baltimore's City Center currently commands the highest average asking
rental rate at $28.21 psf while the remainder of the region is in the low
twenties per square foot. Notable increases in average asking rates
occurred in the Baltimore County East and Baltimore City East submarkets.
Highlights
• Full-service wealth management and retirement plan consulting firm
Greenspring Wealth Management, Inc. has expanded to 6,086 square
feet within 501 Fairmount Avenue bringing the four-story, 88,000
square foot to 88 percent occupancy. Two additional unconfirmed
lease transactions are expected to bring the building to 97 percent
occupancy in the fourth quarter of 2014.
• Corporate Office Properties Trust has continued its portfolio
consolidation exercise completing three separate sale transactions
over the quarter for a combined value of $28,750,000. The properties
include 4969 & 4979 Mercantile Road, 5020, 5022, 5024 and 5026
Campbell Boulevard, and 9930 & 9940 Franklin Square Drive.
Number of Buildings
1,227
Market Size
76,497,016 sf
• 6031 University Boulevard has signed Revere Bank to an 8,401 sf.
• AOL subsidiary Advertising.com is relocating from Tide Point to 45,000
sf in the National Bohemian complex in Brewers Hill. Located at 3700
O'Donnell Street the firm plans to open its new offices in the spring of
2015.
• Law firm Hudson Cook LLP signed a long-term lease for 20,536
sf at 7037 Ridge Road in Hanover, Maryland. Part of the Station
Ridge office park, the Class A building is Leadership in Energy and
Environmental Design (LEED) Gold certified and within walking
distance to the Amtrak and MARC train station outside Baltimore/
Washington International Airport.
Criteria: MacKenzie tracks buildings that meet the following requirements and identifies these buildings as true reflectors of commercial real
estate activity within the Baltimore Metropolitan Statistical Market (MSA). Office: Buildings 15,000 square feet (sf) in size and greater in the
Metro areas within Anne Arundel County, Baltimore City, Baltimore County, and Howard County, buildings 20,000 sf in size and greater within
Baltimore’s City Center, buildings 10,000 sf in size and greater in the Metro areas within Harford County, and buildings 5,000 sf in size and
greater within Annapolis city limits. MacKenzie does not track owner occupied buildings or buildings lease exclusively to medical tenants.
Notable Transactions
Lease
Location
Submarket
Tenant
Amount Leased SF
5585 Sterrett Place
Columbia
QSSR
120,000 sf
250 W. Pratt Street
City Center
Pandora Jewelry
87,682 sf
6956 Aviation Boulevard
BWI
Skyline Technologies
28,753 sf
6170 Guardian Gateway
Harford County
DRS Technologies
15,000 sf
Location
Submarket
Price
PSF
Building Size SF
7031 Columbia Gateway Drive
Columbia
$59,508,000
$240.32
247,624 sf
5233 King Avenue (Condo)
Baltimore County East
$1,039,400
$243.53
4,268 sf
954 Ridgebrook Road (Condo)
I-83 Corridor
$362,790
$145.12
2,500 sf
Sale
Office Submarkets
Annapolis
4Q 2014
3Q 2014
2Q 2014
1Q 2014
Vacancy Rates %
Rental Rates
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
"The Annapolis office market in the 3rd quarter showed cyclical
slowing at the end of the summer. Tenants and buyers took a
vacation from what had been an active market for the first seven
months of the year. The end of vacation and the return of school
has helped push activity back in the market for September. The
West Street corridor is experiencing good activity with deals
competed at 1730 West Street (The Tate Building), Park Place,
125 West Street, and the potential sale of an undisclosed Class A
Office Building. The last quarter of 2014 should be active with a
handful of new to the market tenants looking for space as well as
existing tenants in growth mode."
- Justin T. Mullen
Vice President
Quick Stats
15.22%
-91,735
20.00%
Avg. Rental Rate
Annapolis' vacancy rate rose 2.32 percent
from the second quarter's 12.90 percent to
15.22 percent. This jump is attributed to
approximately 80,000 sf of space allocated
for the Navy returning to the market. The
area's submarket rate stands at 16.94
percent, the highest within the Southern
Metro market behind the Route 2 Corridor.
The submarket suffered it's largest negative
absorption since 2009 as more than 90,000
sf returned to the market driving the yearto-date absorption to a negative 62,591
sf. Several small and medium sized
transactions occurred within the quarter
to offset additional losses along Admiral
Cochrane Drive.
The average rental rate for the Annapolis
submarket remains among the highest in
the Baltimore Metropolitan Statistical Area
(MSA). Properties surrounding Annapolis
Towne Centre regularly command rates
in the low thirties per square foot (psf)
offsetting lower rates on the out-skirts of the
submarket.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
137
Market Size
3,981,264 sf
$23.24
Overview: The State Capital of Maryland and the county seat of Anne Arundel County, Annapolis is situated on the Severn River. The office submarket is
bounded by I-97 to the east, South River to the south, and includes the Route 50/301 corridor on both sides of the Severn River. Designated a "Central
City" by the United States Department of Housing and Urban Development, the submarket is driven by a combination of government and tourism. This
diverse blend of businesses is evidenced by the area’s landscape which is comprised of an equal mix of historically significant buildings dating to the
late 1600s and newer mixed-use lifestyle centers that have emerged over the last decade. Over the last ten years, the United States Naval Academy
along with the area’s tourism and maritime industries have drawn the attention of firms looking for a more relaxed lifestyle for their employees. Steady
growth in multiple sectors including healthcare, intelligence, and defense industries continue to drive market activity. Close proximity to major markets,
the area is within 30 miles of both Baltimore and Washington, DC, has also proved beneficial in expanding the submarket’s boundaries.
* All information furnished regarding property for sale, rent, exchange or ﬁnancing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions,
or changes in conditions, prior sale, lease or withdrawal without notice. All information should be veriﬁed to the satisfaction of the person relying thereon. Portions of the base statistics are from CoStar Property data. Data as of 9/2014.
Baltimore City*
"The Baltimore City office market saw very little activity in the
third quarter. The vacancy ticked up slightly from 13.85 percent
to 14.56 percent. Overall the market area was flat for the quarter
with the vast majority of the negative absorption coming from
two projects, 3000 Falls Road and the Rotunda at 711 W. 40th
Street. 3000 Falls Road, delivered new office and Retail space
at the Mill Building. The Rotunda is repositioning itself with
130,000 square feet (sf) of new and renovated retail space,
140,000 sf of renovated office space and 375 new apartments.
Additional parking along with the existing parking will total over
1,100 spaces. The negative absorption for this project came from
existing tenants vacating because of the construction. Both the
Mill Building and the Rotunda are additional examples of the live/
work trend that we are seeing in the Baltimore City Market."
Vacancy Rates %
Rental Rates
14.56%
-37,682
20.00%
Baltimore City's submarkets saw across
the board increases in vacancy from the
second quarter, most notably in the North
market that saw an increase of 1.77 percent
from 10.81 percent to 12.57 percent. The
Westside continues to struggle with a
vacancy of 28.36 percent and rising.
Overall the submarket saw a reduction in
absorption that is attributed to mid-sized
tenants giving back space along Charles
Street and Falls Road. The submarket
has also met challenges in absorption as
properties are purchased and renovated to
multi-family creating fewer leasing options.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
104
Market Size
7,747,127 sf
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
Quick Stats
2Q 2010
1Q 2010
- James R. Grieves, Jr.
Vice President
$20.57
Avg. Rental Rate
Average rental rates in the remained steady
throughout the submarket fluctuating
minimally in response to slow leasing
activity. The traditional high average rental
rates in the South market have come in line
with the rest of the submarket, falling more
than $9.00 from the third quarter of 2013 to
rest at $20.59 per square foot.
Overview: Baltimore City is located 38 miles north of Washington, DC and 95 miles south of Philadelphia. This submarket is divided into four main areas: Midtown,
which is bounded by Centre Street to the south, I-83 to the east, Martin Luther King Jr. Boulevard to the west, and North Avenue to the north; Baltimore City North,
which encompasses the remaining area north of Route 40; and Baltimore City East and Baltimore City West, which are south of Route 40 and separated by Hanover
Street which runs north-south. Ranking 20th in population for U.S. Cities, Baltimore City is home to the world-renowned Johns Hopkins Hospital and School of
Medicine and sports apparel giant Under Armour. Coupled with major investments by The University of Maryland Medical System in cooperation with the City, all are
in the process of redefining Baltimore City’s broader landscape. Further private redevelopments in Baltimore City’s historic Midtown and North submarket buildings
have also garnered interest as the City seeks to increase its residential population by attracting a highly educated and mobile workforce that seeks a live/work/play
lifestyle. In response, growth in Baltimore’s biotech parks and entrepreneurial incubators are helping Baltimore emerge as a technology hub.
*NOTE: The Baltimore City submarket does not include the City’s central business district, which is a distinctly different submarket called City Center.
4Q 2014
3Q 2014
2Q 2014
1Q 2014
Vacancy Rates %
Absorption Rates
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
"Vacancy rates continue to drop nearly another point and half
while rental rates are on the rise indicating signs of continued
recovery. Mid-sized deals are dominating the activity throughout
the submarket, including notable transactions at COPT's White
Marsh Corporate Center on Corporate Drive as well as Drayer
Physical Therapy opening a White Marsh location at White Marsh
Professional Center. The third quarter also signaled new players
entering the market with Hill Management purchasing two
buildings from COPT on Mercantile Drive and Douglas Legum
purchasing four buildings from COPT on Cambell Boulevard. In
addition, COPT sold off properties to IKEA for back office space
as part of the overall repositioning of their portfolio to focus on
government occupied projects. Look for this mid-market location
to continue to generate activity over the next six to nine months
as tenants seeking value-plays and firms gravitate to locations
that offer commuter-friendly advantages."
- Meghan G. Roy
Vice President
Quick Stats
13.27%
20.00%
34,037
Baltimore County East submarket vacancy
rate dropped 1.73 percent from 14.99
percent in the second quarter to 13.27
percent in the third. The reduction also
indicates a 2.16 percent drop from the same
period one year ago. Little sublet space
currently available and strong activity in the
market could continue this trend into the
fourth quarter of 2014.
Strong leasing activity by small and midsized businesses in the White Marsh area
contributed to a more than 40,000 square
foot (sf) increase absorption from the second
quarter of 2014. The area also recorded
sales along Corporate and Mercantile Drives
adding to the rise in positive activity in the
submarket.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
56
Market Size
1,972,903 sf
$23.24
Avg. Rental Rate
After a year of relatively stagnant rental
rates, the average rate for the submarket
rose $1.53 per square foot (psf) from $21.20
psf in the second quarter to $22.73 psf. The
rate remains below pre-recession averages
of $25.00 psf enjoyed in the second quarter
of 2007, but are well above averages in the
high teens experienced during the recession
indicating a stabilizing market.
Overview: The Eastern Baltimore County submarket is home to a diverse business community, including some of the region’s largest manufacturers
such as GM Power Train, Middle River Aircraft Systems, Lockheed Martin, Signode, and ISG Sparrows Point. An integrated transportation network
links Dundalk, Essex, Middle River, and Rosedale to I-95, I-695, Baltimore/Washington Thurgood Marshall International Airport, and Martin State
Airport. MARC commuter rail is available in Middle River. Anchored by White Marsh, a planned 2,000 acre mixed-use community adjacent to I-95, and
close proximity to Aberdeen Proving Ground, the U.S. Army’s oldest military proving ground, has helped the Baltimore County East submarket grow
substantially over the last decade as more than $800 million in private, state, and county investment in infrastructure, parks, schools, and housing has
encouraged employment-intensive development throughout the submarket. Notable investments in new office, flex, and industrial opportunities by
regional developer Corporate Office Properties Trust (COPT) and Franklin Square Hospital are expected to add an approximate 700,000 sf of additional
office space to the submarket in the coming years.
Baltimore County West
The Baltimore County West submarket continually competes
with amenity rich neighboring submarkets BWI, Columbia, and
Baltimore City for tenants. A draw for government contractors
looking for a cost-effective alternative that places them next door
to the government entities they support, the area maintains a low
profile within the region.
Vacancy Rates %
Absorption Rates
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
- Christopher C. Bennett
Executive Senior Vice President/Principal
1Q 2010
"The Baltimore County West submarket remains quiet as
neighboring submarkets Columbia and BWI kick off new projects
drawing attention away from area. The area has a long history
of stability, filling space as it comes available and never really
tipping the needle heavily in either direction making the area a
good judge of activity for the overall health of the region."
Quick Stats
17.24%
-34,780
20.00%
The direct vacancy rate for the Baltimore
County West submarket rose more than 1
percentage point from the second quarter
from 16.05 percent to 17.24 percent. The
sublet vacancy rate added an additional
0.1 percent to bring total vacancy rate a
full three percent above the third quarter of
2013's historical low of 14.24 percent.
Several small and mid-sized vacancies
added to weak absorption for the quarter
adding more than 30,000 square feet (sf)
back in to rotation. The loss comes after a
strong second quarter and bringing year to
date absorption to -26,533 sf.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
68
Market Size
3,196,077 sf
$19.86
Avg. Rental Rate
Average rental rates remain steady, hovering
near the $20.00 per square foot (psf) mark
for the sixth consecutive quarter.
Overview: Baltimore County West is comprised of three unincorporated, census designated communities; Woodlawn, Catonsville, and Arbutus/
Halethorpe. The submarket is adjacent to Baltimore City, and bordered by Howard County to the west, and Anne Arundel County to the south. I-70
and I-695 provide easy access to Towson, the Baltimore/Washington Thurgood Marshall International Airport, and Frederick and Montgomery Counties.
Home to the headquarters of the Social Security Administration (SSA) as well as The Centers for Medicare and Medicaid Services, two of the largest
employers in the State of Maryland, the Woodlawn submarket is driven heavily by government related activity. The area is often informally referred to as
Security, Maryland, due to the importance of the SSA's headquarters as well as nearby Security Boulevard (Maryland Route 122) and Security Square
Mall. Woodlawn has been designated an Enterprise Zone by the State of Maryland Business and Economic Development.
BWI
The BWI submarket is largely comprised of office parks that
house technology and government contract focused firms.
Ideally situated to offer ease of access to Baltimore, Washington,
DC, and Baltimore Washington International Airport, the
submarket regularly competes with neighboring submarkets
Annapolis and Columbus for large corporate tenants.
Vacancy Rates %
Absorption Rates
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
- Christopher C. Bennett
Executive Senior Vice President/Principal
1Q 2010
"The BWI submarket remains relatively healthy with several
mid-sized firms expanding their presence this quarter, however,
Airport Square continues to struggle. Newer product with
better amenities have caused a high vacancy in that sector of
the submarket that will need to be addressed. Because activity
is dependent on government growth and business, look for
changes in the fourth quarter of 2014 and early 2015 to reflect
budgetary effects from the start of a new government fiscal year."
Quick Stats
12.98%
20.00%
64,636
Avg. Rental Rate
The region's vacancy rate remains steady
having dropped 1.27 percent from the third
quarter 2013 to 12.98 percent in the third
quarter of 2014. Among the lowest in the
Baltimore region, second only to the I-83
Corridor in the Northern Metro Market, the
area remains well below the 2010 high of 22
percent.
Strong absorption during the third quarter
is attributed to Skyline Technologies
occupation of more than 28,000 square feet
(sf) at Aviation Boulevard and multiple small
and mid-sized expansions along Concourse
Drive. Year to date, the submarket has
absorbed 52,672 sf and currently has 43,000
sf of new space currently under construction.
Among the highest in the Baltimore region,
BWI's average rental rate routinely remains
in the mid-twenties per square foot (psf). The
current average of $24.49 psf represents a
$0.29 psf increase from the second quarter
of 2014 and $0.78 psf decrease from the
same period one year ago. This rate is on
par with the five year average of $24.69 psf.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
109
Market Size
8,820,058 sf
$24.49
Overview: Located in northern Anne Arundel County, just south of Baltimore, the BWI Office submarket surrounds Baltimore/Washington International
Thurgood Marshall Airport and includes Glen Burnie, Linthicum, Hanover, and several smaller business districts. The area, which is home to the
National Security Agency and Fort George Meade, is supported by a diverse set of economic drivers including world class private sector employers,
telecommunications, health care, retail and distribution operations, and a rapidly expanding information and defense industry including eight of the top
10 defense contractors in the nation. Over the past 30 years, the BWI submarket has transformed as technology and intelligence communities take
advantage of the submarket’s close proximity to Fort Meade and major metropolitan markets in Baltimore and Washington, D.C., growing total office
inventory to nearly 9 million sf (msf) of office space.
City Center
4Q 2014
3Q 2014
2Q 2014
1Q 2014
Vacancy Rates %
Absorption Rates
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
"The announcement of Pandora Jewelry signing 88,000 square
foot (sf) lease at 250 W. Pratt Street for its new US headquarters
created a huge buzz in the City Center. This together with last
Quarters announcement that Koa USA is moving to One Charles
Center continues the trend of companies moving into urban
locations to accommodate the desire of their workforce to live
and work in the City. This trend has been the driving factor to
the redevelopment of many of Baltimore’s older office buildings
into residential units. The Pandora Jewelry lease has also had
another effect on the City Center real estate market - with 250
West Pratt Street now 98 percent leased the ownership has put
the property on the market for sale. Also on the market for sale
is 300 East Lombard Street. This marks this first time in several
years that we have had multiple A Class properties on the market
at the same time."
- Matthew M. Curran
Real Estate Advisor
Quick Stats
17.59%
-59,046
20.00%
Avg. Rental Rate
Overall, City Center saw a 0.43 percent
increase in vacancy from the second
quarter's 17.16 percent to 17.59 percent in
the third quarter. This slight rise is attributed
to a 2.36 percent increase in Class A
vacancy. Class A+ space dropped to 8.62
percent, keeping vacancy under 10 percent
for the fourth consecutive quarter.
Strong leasing activity throughout the
submarket is expected to ensure a healthy
new year when tenants begin taking
occupancy of space in 2015. Losses in
Class A space (-67,688 sf) were offset by
gains in Class A+ space (25,580 sf) while
activity within the Class B and B+ market
cancelled itself out registering a loss of
approximately 18,000 sf in the Class B
market and a slight 1,864 sf gain in Class B.
At $28.21 per square foot (psf) Class A+
space currently commands the highest
average asking rental rates within the
Baltimore region. This marks a $2.73 rise
from the second quarter's $25.28 psf and a
$3.88 psf increase from the third quarter of
2013's $24.33 psf. Rounding out the overall
average are Class A ($23.26 psf), Class B+
($18.55 psf), and Class B ($17.72 psf) to
average $20.80 psf.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
78
Market Size
14,463,105 sf
$20.80
Overview: As the downtown district of Baltimore City, the City Center submarket is defined by Broadway Street to the east, Martin Luther King Jr.
Boulevard to the west, Centre Street to the north, and Cross Street to the south. City Center is Baltimore’s dense central business district and easily
accessible to both I-95 and 295. Baltimore’s City Center continues to expand eastward along the water’s edge to include Harbor East and the hotly
debated Harbor Point. Total office inventory is nearly 14.5 million square feet (msf). Drawn to City Center for its water views and amenities including
Oriole Park at Camden Yards, M&T Bank Stadium, as well as easy access to a variety of ethnic restaurants, shops, and residences, Baltimore’s City
Center is a diverse mix of old and new. In 2011, The Downtown Partnership unveiled an ambitious proposal to transform the Central Business District’s
landscape to include $100 million in new parks and public plazas adding up to revitalization of Baltimore’s urban core. Major projects for the Inner
Harbor, Charles Center, and west side are expected to generate new opportunities and encourage private growth.
Columbia
The largest of the Baltimore Metropolitan Statistical Area (MSA)
submarkets both in number of buildings and square feet (sf),
Columbia routinely draws firms looking for a commuter-friendly
and amenities rich alternative to both Downtown Baltimore and
Washington, D.C. Major lifestyle projects in the pipeline in the
heart of Columbia are driving further interest to area.
Vacancy Rates %
Absorption Rates
"Strong sale activity and the kick-off Downtown Columbia
transformation to a lifestyle location has fueled activity this
quarter. Additionally, government contractor QSSR has signed
on to approximately 120,000 square feet signaling a potential
trend in large users seeking these types of amenities."
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
- Patricia B. Gottesman
Research & Communications Director
Quick Stats
11.14%
20.00%
56,833
Columbia's direct vacancy rate continued
its gradual decline moving 0.43 percent
from 11.57 percent to 11.14 percent. With
the exception of a slight hiccup in the fourth
quarter of 2013, the area's vacancy rate
has steadily declined since the third quarter
of 2011 and is now the second lowest in
submarket in the region behind the I-83
Corridor's 8.48 percent.
The market bounced back after suffering an
approximate 58,000 sf loss in the second
quarter of 2014. The positive activity is
attributed to multiple mid-sized gains along
Columbia Gateway Drive, Maple Lawn,
Marshalee Drive, and Old Dobbin Lane.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
227
Market Size
13,23,439 sf
$24.43
Avg. Rental Rate
Columbia's average rental rate has remained
steady over the last three years ranging from
$23.39 psf (third quarter 2011) to $24.74 psf
(first quarter 2014) indicating stable market
conditions. These rates are routinely among
the highest in the Baltimore MSA and are
second only to BWI ($24.49) this quarter.
Overview: Located between Baltimore and Washington, DC in Howard County, Columbia offers convenient access to Annapolis, the Chesapeake
Bay, and three international and regional airports. Commuter and bus services and the MARC commuter rail system are available to residents and
businesses. Routinely recognized by national news organizations for its highly educated labor pool, the Columbia submarket boasts one of the largest
concentrations of corporate, political, and financial centers outside of Washington, DC. Its long history of diversity and abundance of premier retail and
recreational amenities has helped the Columbia market remain the largest within the Baltimore Metropolitan Statistical Area (MSA).
harford
Activity within the Harford County submarket is driven largely by
activity surrounding Aberdeen Proving Grounds (APG). The area,
affectionately referred to as The Gate, has seen tremendous
growth on and off base. With the exception of these projects,
and several surrounding lifestyle center Boulevard at Box Hill,
the submarket is comprised of mid-sized and converted dwellings
making the area ideal for small and expanding businesses.
Vacancy Rates %
Absorption Rates
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
“While the numbers still look rather low, we’re seeing activity by
local businesses start to gain momentum. Activity surrounding
the medical community continues to be steady, but now were
seeing small business owners grow and expand which is great
news for the Harford community.”
- Thomas C. Mottley
Vice President
Quick Stats
24.66%
20.00%
2,952
The area's vacancy rate remains largely
unchanged and the highest within the
Baltimore Metropolitan Statistical Area
(MSA). The area suffered as several large
projects outside Aberdeen Proving Ground
entered the market vacant. Activity remains
strong inside APG for those firms that can
gain access.
Leasing activity within the submarket saw
an increase as DRS Technologies signing
space at 6170 Guardian Gateway Drive in
Aberdeen, an occupancy expected in early
2015. Overall, absorption remains slight for
a second consecutive quarter.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
106
Market Size
3,690,255 sf
$22.88
Avg. Rental Rate
Down a $1.18 per square foot (psf) from the
third quarter of 2013's $24.07 psf, the area
remains steady at $22.88 psf. The average
rental rate mirrors neighboring submarket
Baltimore County East ($22.73 psf) and is
in line with the Northern Metro submarkets
Reisterstown Road Corridor ($22.53 psf)
and Towson ($21.41 psf).
Overview: Harford County is located along the I-95 Corridor just 23 miles north of Baltimore. Harford’s major business districts
fall within the County’s Development Envelope and include Bel Air, the county seat, Aberdeen, Havre de Grace, Riverside,
Joppa, and Edgewood. I-95, U.S. Route 1, U.S. Route 40, and Maryland 24, traverse the County providing easy access to its
more than 20 business parks including Box Hill Corporate Center, Water’s Edge Corporate Campus, The GATE at Aberdeen
Proving Ground, North Gate Business Park, and the HEAT Center. The U.S. Army’s Aberdeen Proving Ground (APG) is an
economic generator for the region and the County’s largest employer with more than 13,000 employees. As a result of the
recent military Base Realignment and Closure (BRAC) process, APG is the fastest growing area in Harford County.
I-83 Corridor
The I-83 Corridor is a mix of office, retail, and flex properties
that intermingle with one another along Interstate 83. News
surrounding spice company McCormick exploring the market
for a new Headquarter's location has industry professionals
speculating. The 125 year old company currently houses both
its headquarter offices and manufacturing locations within the
submarket's boundaries.
Vacancy Rates %
Absorption Rates
"The I-83 Corridor has enjoyed its most successful year in
memory. Vacancy is at an all-time low and the growth of
employment of Pennsylvania residents has helped sustain the
market. Rental rates have gotten healthier for the Landlords but
it is in reaction to success that has been had in the market. Look
for the market to remain “steady as she goes”.
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
- Matthew B. Mueller
Vice President
Quick Stats
8.48%
112,668
20.00%
The lowest within the Baltimore Metropolitan
Statistical Area (MSA), the I-83 Corridor
continues to enjoy a vacancy rate below ten
percent indicating healthy market conditions.
This is the fifth consecutive quarter that the
area as reduced its vacancy rate.
Strong absorption in the submarket is
attributed to taking approximately 90,000
square feet (sf) at 1 Fila Way. The area also
saw notable move-ins at 4 N. Park Drive in
Hunt Valley.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
131
Market Size
7,702,580 sf
$19.70
Avg. Rental Rate
The corridor's average asking rental rate
dropped nearly $2.00 per square foot (psf)
from $21.65 psf in the second quarter to
$19.70 psf in the third quarter. This is the
lowest average rate has been since the first
quarter of 2006.
Overview: The I-83 Corridor, which includes the business districts of Timonium, Hunt Valley, Loveton, and Sparks, encompasses the majority of Northern
Baltimore County and stretches from Pennsylvania to Towson. Excellent infrastructure connects the Corridor to Baltimore City by way of Interstate 83
and Maryland Route 45, more commonly known as York Road. In addition, the light-rail system offers easy access to Baltimore City, Washington, DC,
and the Baltimore/Washington Thurgood Marshall International Airport. Arguably one of the most diverse submarkets, the I-83 Corridor is a blend of
office, flex, and retail properties, dotted open land, and industrial landmarks. Attracted by numerous amenities including ease of access via Interstate 83,
close proximity to Towson, and life-style epicenter Hunt Valley Towne Center, businesses in the Corridor are a blend of technology, professional services,
and corporate and regional headquarter locations.
Reisterstown Road Corridor
"The Reisterstown Road Corridor continued to see an improved
3rd quarter of 2014. Vacancy numbers continued in a downward
trend, with large vacancies being filled at Mill Run Circle and
Painters Mill Road. The market seemed to have good amount of
traffic this quarter, especially with small to medium size users. It
also appears there is still a good amount of space available for
these size tenants, especially in the buildings around the Beltway
and I-795. The hope is that as Class A and Class A Medical
space continues to fill up, the trend will continue with the Class B,
and small to medium size users."
Vacancy Rates %
Absorption Rates
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
- T. Henson Ford
Leasing Representative
Quick Stats
18.61%
20.00%
6,793
The Reisterstown Road Corridor continues
to struggle as it recovers from major losses
sustained in early 2013. The area has
remained relatively unchanged since the first
of the year with direct vacancy dropping 0.15
percent from the second quarter's 18.75
percent to 18.61 percent.
Absorption activity throughout the Corridor
remains steady as positive and negative
activity all but cancel one another out. In
this case, 6,793 square feet (sf) of positive
absorption marks a 33,024 sf recovery from
a 26,231 sf loss in the second quarter 2014
bringing year to date absorption to 61,316 sf.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
84
Market Size
4,650,535 sf
$22.53
Avg. Rental Rate
The average rental rate for the Reisterstown
Road Corridor rose a slight $0.14 per square
foot (psf) over the quarter from $22.39 psf in
the second quarter to $22.53 psf in the third.
This nearly a $1.00 increase from the same
period one year ago.
Overview: The Reisterstown Road Corridor submarket is bounded by Greenspring Avenue to the east, Liberty Road to the west, the junction of Butler
Road, Hanover Pike and Reisterstown Road to the north, and the Baltimore City line to the south. It includes Pikesville, Owings Mills Town Center,
McDonogh/Garrison, Historic Reisterstown, and the Red Run Boulevard corridor. The Reisterstown Road Corridor is an assorted stretch of retail,
flex, and office properties connecting Baltimore City to the rolling hills of Northern Baltimore County via Interstate 795 and Reisterstown Road. The
submarket is currently seeing revitalization as more than $1 billion in improvements pour into the area. Most notably, Metro Centre at Owings Mills, a 47
acre, pedestrian-friendly development surrounding the Metro subway station, is under construction having Phase I of its master plan nearing completion.
Designated by the State of Maryland as a transit-oriented development project, the project includes offices, shops, restaurants, a new public library, and
a satellite campus for the Community College of Baltimore County.
Route 2 Corridor
4Q 2014
3Q 2014
2Q 2014
1Q 2014
Vacancy Rates %
Absorption Rates
4Q 2013
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
"The quietest of the Baltimore submarkets, the Route 2 Corridor
continues to struggle to attract office users from amenity rich
competitors Annapolis and BWI. While retail and non-office
properties continue to revitalize their parks and storefronts
achieving decent occupancy, not much is happening to improve
the quality of the office product. Retail and industrial user
continue to dominate this area as office users consist of those
seeking bargain rates or a location close to home causing the
vacancy rate to remain relatively high. Anyone seeking a bargain
should consider this area an alternative to higher priced markets
to South and West – the area is poised for action, it just needs a
push in the right direction."
- Bethany S. Hobbs
Real Estate Advisor
Quick Stats
16.64%
20.00%
-8,238
Traditionally one of the quietest of the
submarkets with the Baltimore Metropolitan
Statistical Area (MSA), the Route 2
Corridor's vacancy rate rose 1.80 percent
from 14.84 percent in the second quarter of
2014 to 16.64 percent. This rate was also
affected by approximately 25,000 square
feet (sf) of vacant space entering the market
as 1005 Brandon Shores Drive was added
to tracking.
The Route 2 Corridor suffered a second
consecutive loss in the third quarter as
multiple small businesses throughout the
submarket. The smallest of the submarkets,
both in number of buildings and overall
square feet, small changes within the
Corridor can make a big difference in the
viability of the area.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
41
Market Size
1,455,030 sf
$20.93
Avg. Rental Rate
Regularly competing with neighboring
submarkets Annapolis and BWI, the Route 2
Corridor offers a cost effective, and stable,
alternative to higher priced submarkets in
the area.
Overview: Located in northeast Anne Arundel County, the Route 2 Corridor stretches from Severna Park to Pasadena, and includes the business
districts of Glen Burnie and Arnold. Route 2 (or Ritchie Highway) connects Annapolis and the Baltimore Beltway offering access to other points in Anne
Arundel County. In addition, Route 50, which extends from the southern part of the market (Severna Park), makes travel to Washington, DC an easy
drive. The smallest of the Baltimore submarkets, the Route 2 Corridor submarket of Anne Arundel County provides an assortment of office and retail
facilities which cater to their local clientele. From the urbanized northern reaches of Glen Burnie, which is home to the monstrous MVA facility and other
structures typical of an urban area, to the small strip centers that serve wealthy suburbanites in "South County", the Route 2 Corridor is a microcosm of
our region. The larger buildings in the north that were once populated by the "nationals" have all seen a retrenchment, while the smaller "mom and pop"
tenants along Route 2, are slugging it out as they compete for allegiance from their loyal neighbors.
Towson
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
Vacancy Rates %
Absorption Rates
3Q 2013
2Q 2013
1Q 2013
4Q 2012
3Q 2012
2Q 2012
4Q 2011
1Q 2012
3Q 2011
2Q 2011
1Q 2011
4Q 2010
3Q 2010
2Q 2010
1Q 2010
"The Towson Commercial market continues to be driven by the
extensive retail activity in the Downtown area. The Cinemark
Theatre Complex opened in early July with up to seven eating
establishments slated for late fall openings lead by The Bone
Fish Grill. The mixed-use development proposed by Caves
Valley Partners has signed an LOI with a major food retailer for
the heart of its development; this activity will act as a catalyst for
increased activity in the office and residential markets. Federal
Realty in proposing an apartment complex behind the Suntrust
Bank at Washington and York Roads. All of the above will
contribute to the long term plans of the local government for a
live, work, play Downtown environment."
- William W. Whitty, Jr.
Senior Vice President/Principal
Quick Stats
16.15%
20.00%
17,284
Avg. Rental Rate
Direct vacancy within the Towson core
remains largely unchanged for the third
consecutive quarter rising a slight 0.9
percent from the second quarter's 16.06
percent to 16.15 percent. An additional 0.7
percent of sublet vacancy drives the total
vacancy to 16.22 percent for the submarket.
Absorption activity in the submarket is
attributed to small and mid-sized tenants
expanding and relocating within the
submarket boundaries leading to a slight
increase in positive absorption.
Average rental rates for the submarket were
steady for a fourth consecutive quarter rising
$0.50 over the second quarter's $20.91 per
square foot (psf). This average is $0.92 psf
higher than same period one year ago.
Vacancy Rate
Vacancy
Absorption
Rate
Number of Buildings
89
Market Size
5,703,643 sf
$21.41
Overview: Towson, the county seat of Baltimore County, is located directly north of Baltimore City, inside the beltway, east of
I-83, and along York Road. It is home to two universities, Goucher College and Towson University, as well as three regional
hospitals, Greater Baltimore Medical Center (GBMC), St. Joseph Medical Center, and The Sheppard Pratt Health System.
Steady growth of business and development continues to stimulate Towson’s local economy. Known for its four-story Towson
Town Center shopping mall, downtown Towson continues to revitalize its retail, restaurants, residential, and office buildings
with a private investment of roughly $500 million. Currently, more than $85 million in development projects continue to thrive
as projects like Towson Square, with the construction of new restaurants, new 8,500-seat Cinemark Theater, and parking
garage, show significant progress along the Towson skyline.
Retail Market
BALTIMORE Retail oVERVIEW
The backbone of the Baltimore Metropolitan Statistical Area
(MSA) is often considered to be the community and neighborhood
shopping centers which continue to dominate market activity with
a wide variety of small shop leasing. As vacancy rates tighten to
less than 10 percent, the uncertainty of consumer demand driven
by flat income and job growth continues to place Landlords in a
position of flexibility regarding rent reductions, rent abatement,
and TI concessions. Given the moderate inventory absorption
over the last quarter, tenant retention remains a top priority.
Average rental rates in our MSA for these centers have sustained
the national average of $17.00 to $24.00 per square foot (psf)
while the higher quality “A” centers in the MSA (ie: Baltimore City,
Annapolis, Howard County, York Road Corridor, etc..) the upward
pressure on rents are reaching the $35.00 to $50.00 psf range.
Tenant improvement allowances remain relevant, but discounts
and other concessions are scarce.
mile away, David S. Brown Enterprises’ Metro Centre at Owings
Mills has delivered the first phase 117,000 square feet of its
projected 300,000 square feet (sf) of retail space and recently
announced that Canadian-chain Eggspectation will be joining the
Fractured Prune, Time Square Kitchen, and Subway.
Baltimore’s $400 million Horseshoe Casino has been open just
over a month adding to the competition of destination gambling.
Optimism is high thought it is still too early to know the positive
effect casino traffic will have on the surrounding area’s business
activity. With the traditional holiday shopping season fast
approaching, the pressure to open new locations by the end of
October remains high. As retailers compete for your consumer
dollar, look for innovative techniques in mobile payment options,
product promotions and the power of social media. All in the
name of satisfying your thirst to “stay connected”.
The success of The Shops at Canton Crossing Phase I, now 99
percent occupied, has developer Chesapeake Real Estate Group
pre-leasing phase II of the project and are rumored to have Dick’s
Sporting Goods, Pier 1 Imports, and Nordstrom Rack leading the
tenant roster.
Local developer, Greenberg Gibbons, once again thrusts itself
to the forefront with its recent acquisition of Towson’s 142,000
square foot (sf) Shops at Kenilworth from Towne Properties, of
Cincinnati, Ohio. Given Greenberg’s first class reputation, the
energy surrounding Towson will continue as they strive to create
the Best in Baltimore. The developer also announced the signing
of several notable national retailers for its Foundry Row project
in Owings Mills. Greenberg Gibbon’s regulars LA Fitness, Sports
Authority, DSW, Panera Bread, Ulta, and Zoe’s Kitchen, will join
emerging area concepts Smashburger and Nalley Fresh when
the project delivers sometime in late 2015/early 2016 leading
speculation to surround the Reisterstown Road market as
competing properties compete for top-tier retailers; less than a
- W. Christopher Walsh
Vice President
Quick Stats
4.77%
-32,401
20.00%
The overall vacancy rate for the Baltimore
MSA remains well under 10 percent with
multiple submarkets recording rates under
5 percent. Areas with strong demographics
and pyschographics (Annapolis, Ft. Meade,
Columbia, and York Road Corridor) are
consistently strong as retailers flock to new
construction and lifestyle center oriented
projects.
Though the region recorded a negative
absorption for the quarter, activity with the
area is expected to "right itself" in the coming
months as the traditional holiday shopping
season takes hold. The area currently has
less than 300,000 sf under construction.
Vacancy Rate
Vacancy
Absorption
Rate
$18.80
Avg. Rental Rate
Average rental rates for the region continue
to recover from to pre-recession levels near
$20.00 per square foot (psf). The Southern
Metro Markets (Annapolis, Fort Meade, and
Columbia) continue to command the highest
of the average asking rental rates averaging
slightly above $20.00 psf thanks to multiple
projects commanding rates closer to an
average $35.00 psf.
Vacant
20,000,000
5,000,000
7.0%
$20.00
Asking Rental Rates
10,000,000
8.0%
$22.00
15,000,000
Square Feet
Vacancy Rates %
Avg. Rental Rates
6.0%
$18.00
5.0%
4.0%
$16.00
3.0%
$14.00
Direct Vacancy
Occupied
2.0%
$12.00
1.0%
0
$10.00
Conditions throughout the region continue to tighten with the exception
of the Reisterstown Road Corridor which continues to hover around
11 percent. Though this rate is considered by industry professionals
as "healthy", compared to its counterparts the York Road Corridor (2.68
percent) and Columbia (2.18 percent) the area remains somewhat vacant.
Multiple new projects in various stages of the pipeline are set to deliver
along the Corridor increasing competition. Baltimore City remains the
largest of the submarket with more than 1,500,000 million square feet
available. However, the market remains tight with a 6.65 percent vacancy
rate as larger locations absorbed leaving small in-line spaces available.
2014 4Q
2014 3Q
2014 2Q
2014 1Q
2013 4Q
2013 3Q
2013 2Q
2013 1Q
2012 4Q
2012 3Q
2012 2Q
2012 1Q
2011 4Q
2011 3Q
2011 2Q
2011 1Q
2010 4Q
2010 3Q
2010 2Q
2010 1Q
0.0%
The region dropped below the 5 percent mark for the first time in recent
memory following several years of steady activity just below six percent
indicating tightening market conditions. The Columbia submarket
continues to garner the largest average rental rate, commanding
approximately $24.48 psf. The Annapolis and Fort Meade submarkets are
also routinely among the top average rental rates for the region at $23.00
psf and $22.86 psf respectively. Baltimore County East continues to
struggle at $14.76 psf even as neighboring submarket White Marsh/Perry
Hall averages $17.11 psf.
Highlights
• Saint Agnes Hospital has leased 38,000 square feet (sf) of space at 40
West Plaza, the site of the former Room Store. The new multi-specialty
healthcare center will provide greater coordination of care and give
patients increased access to physicians specializing in primary care,
obstetrics and gynecology, a variety of specialists and services for
imaging and laboratory.
• Merritt Park Shopping Center has signed Texas Roadhouse to the
newly remodeled center located at the corner of Holabird Avenue
and Merritt Boulevard. The steak chain was recently recognized by
Nation’s Restaurant News’ second annual Consumer Picks as the top
steakhouse.
• Thomas Run Station sold for $5,500,000. The three retail buildings
portfolio on Churchville Road in Bel Air, Maryland is 100-percent leased
with tenants including Dunkin’ Donuts, State Farm Insurance, Goodwill
and La Garderie Childcare
• Metro Centre at Owings Mills has signed Montreal, Canada-based sitdown restaurant chain Eggspectation, 5,582 square feet of space. The
new Transit-Oriented Development (TOD) encircling the Owings Mills
Metro Station is the first Baltimore County location for the restaurant.
• Syracuse New York-based Dinosaur Bar-B-Que, a biker- and bluesoriented barbecue chain, is opening its first Baltimore location in Fells
Point. Currently under review with the Liquor Board, the space is
expected to be approximately 8,295 square feet at 1401 Fleet Street.
• Stone Cove opened its second location, Maryland’s first, in Bel Air Town
Center. Located at 502-592 Baltimore Pike, the restaurant features a
unique concept that places the guests “in the kitchen” allowing patron’s
to interact directly with the Chef.
• The Westview Promenade in Frederick Maryland signed leases with
J.Jill for 3,000 sf and Plow & Hearth for 5,000 sf to open late this fall.
• Wolf's Furniture is preparing to open an outlet store in the Ballenger
Creek Plaza in Frederick Maryland. The furniture store will be
occupying 40,000 sf of space formerly leased by grocer Super Fresh.
• Chick-Fil-A has announced a second Baltimore City location. The
fast food chain will join CVS at 400 E. Pratt Street when the new
promenade space delivers later this fall.
Number of Buildings
2,363
Market Size
105,352,066 sf
Lease
Location
Submarket
Tenant
Amount Leased SF
6501 Baltimore National Pike
Baltimore South
St. Agnes Hospital
38,000 sf
10 Carroll Plaza
Carroll County
Home Goods
23,000 sf
5 Bel Air S Parkway
Harford County
AC Moore
24,000 sf
400 E. Pratt Street
City Center
CVS
9,660 sf
Location
Submarket
Price
PSF
Building Size SF
203 International Circle
York Road Corridor
$1,100,000
$922.13 psf
3,650 sf
6855 Loch Raven Boulevard
York Road Corridor
$2,250,000
$922.13 psf
2,440 sf
7657 Arundel Mills Boulevard
Fort Meade
$1,950,000
$620.23 psf
3,144 sf
Sale
Industrial Market
BALTIMORE Industrial oVERVIEW
Overall vacancy
Warehouse vacancy
Flex vacancy
Warehouse Avg. Rate
Flex Avg. Rate
Historical Overview
Industrial Market Extends Momentum in Q3
Presented by Anirban Basu, Sage Policy Group, Inc.
2014 Q4
2014 Q3
2014 Q2
2014 Q1
2013 Q4
2013 Q3
$0.00
2013 Q2
2.00%
2013 Q1
$2.00
The Carroll County market has net absorbed nearly 400,000 sf
over the past year while the Baltimore County East market has
chipped in another 235,000 sf. Direct vacancy fell from 10.1
percent a year ago to 9.2 percent over the past four quarters.
Despite impressive net absorption and declining vacancy,
warehouse asking rent has actually slipped over the past year,
from $4.78 per square foot (psf) a year ago to $4.76 psf more recently.
2012 Q4
4.00%
2012 Q3
$4.00
2012 Q2
6.00%
2012 Q1
$6.00
2011 Q4
8.00%
2011 Q3
$8.00
2011 Q2
10.00%
2011 Q1
$10.00
2010 Q4
As has been the case for many a quarter, the most interesting
action in in the industrial market. Net absorption in the regional
warehouse segment approached 1.7 million square feet (msf)
during the third quarter alone, with the Harford/Cecil market
tallying 863,931 square feet (sf) of net absorption on its own
over a three-month period. That market has net absorbed
almost precisely half of what the regional market has absorbed
year-to-date (1.33 msf out of 2.70 msf).
2010 Q3
12.00%
2010 Q2
$12.00
2010 Q1
Both Regional Warehouse and Flex Markets Progress
0.00%
Dynamics within the flex market are less robust. During the third quarter, the regional flex market net absorbed -70,455 sf, though
year-to-date, the market has net absorbed more than half a msf. Harford/Cecil leads the way, with net absorption of 142,500 sf
over the past year. However, Harford/Cecil availability stands at 14.6 percent, above the regional average availability share of
13.6 percent. The BW Corridor and Baltimore City have also net absorbed more than 100,000 sf over the past year. As with the
warehouse market, asking rent has slipped in the flex market, from $10.72 psf a year ago to $10.57 psf today. This is likely an
indication of motivated lessors of space, which when coupled with a regional economy that continues to expand implies active
leasing during the months ahead.
Quick Stats - fLEX
9.22%
Vacancy Rate
-70,455
Absorption
$10.57
Avg. Rental Rate
Quick Stats - WAREHOUSE
8.64%
Vacancy Rate
1,690,165
20.00%
Vacancy
Absorption
Rate
$4.76
Avg. Rental Rate
Vacancy Rates %
Absorption Rates
Warehouse - Vacancy & Absorption By Region
Flex - Vacancy & Absorption By Region
120,000
20%
12.9%
550,000
10%
11.8%
10%
450,000
0%
20,000
-5%
0
-10%
-20,000
-40,000
-15%
-60,000
-20%
Vacancy Rates
5%
40,000
Absorption (sq. ft.)
4.1%
60,000
Absorption (sq. ft.)
15%
12.4%
8.0%
8.2%
7.6%
15%
650,000
13.5%
12.4%
8.0%
7.2%
350,000
5%
6.9%
4.4%
4.8%
3.8%
0%
250,000
-5%
150,000
50,000
Vacancy Rates
13.2%
100,000
80,000
Vacancy Rates %
Absorption Rates
-10%
-50,000
-15%
The vacancy rates in the flex market rose a slight 0.19 percent over
the quarter due to small elevations in the Annapolis, Arbutus, Carroll
and Woodlawn markets. The Reisterstown Road Corridor continues
to struggle (16.49 percent), but overall the market remains strong.
Negative absorption for the quarter is fairly distributed throughout the
region with relatively mild losses in the Arbutus, BW Corridor, Carroll,
I-83 Corridord, and Woodlawn submarkets that cancelled out gains in
the Baltimore City and Harford/Cecil County submarkets. Average rental
rates remained steady for the fourth straight quarter. The Annapolis
submarket continues to garner the highest average at $14.16 psf while
the remainder of the region hovers at approximately $10.00 psf. The
Carroll County market showed the highest year-over-year gain, rising
$1.35 psf to average $9.11 psf.
-20%
I-83 Corridor
Harford / Cecil County
Carroll County
BW Corridor
Baltimore City
-250,000
I-97 / Annapolis
I-83 Corridor
Harford / Cecil County
Carroll County
BW Corridor
Baltimore City
I-97 / Annapolis
-150,000
Baltimore's warehouse market continues to contract as space is
absorbed. The Annapolis, Carroll, I-83 Corridor, Reisterstown Road
Corridor, and Woodlawn submarkets are experiencing vacancy rates
below 5 percent indicating a healthy market. Strong activity in the
BWI, Carroll, and Harford/Cecil submarkets experienced strong gains
absorbing a combined 1,525,921 sf. The Baltimore County East and
Baltimore City submarkets were the only areas to see a decline, losing
approxiamtely 54,000 sf and 38,461 sf respectively.The region's average
rental rate continues to remain under $5.00 psf even as some markets
experience record averages closer to the $10.00 psf range as exampled
by the I-83 Corridor which is averaging $8.39 psf.
Highlights
• 504 Advantage Way sold for $31,000,000. Located in Advantage
Business Park Aberdeen, Maryland, the 528,780 sf bulk warehouse
is currently 100 percent leased by three tenants including the 34th
largest private company in the US Gordon Food Service (GFS).
• Merritt Properties broker ground on NAFCO & Congressional
Seafood Company’s new headquarters and seafood distribution
facility at 7775 S. Chesapeake Bay Court in Jessup, Maryland. The
70,000 sf seafood processing facility is expected to be completed by
February 2015.
• Packaging solutions company Quality Packaging Inc. signed a
10,200 sf lease at 8800 Kelso Drive to be used as a warehouse and
distribution center.
• A 42,214 sf flex building at 1805 Margaret Avenue in Annapolis,
Maryland sold for $4,300,000.
• Cosmetics giant Sephora held a ribbon cutting for its new facility
in Harford County. The company made headlines in 2013 when
it purchased the property in Perryman, Maryland to expand its
distribution capabilities. The new 650,000 sf facility will be used
to fulfill online orders and retail shipments. The project received
economic development support from both the Maryland Department
of Business and Economic Development and Harford County.
• A Class “B” warehouse located at 8730 Greenwood Place in Savage
Maryland was purchased for $9,900,000. Though the 121,500 sf
warehouse had undergone some improvements since its purchase in
2010 for $4,500,000, the deal highlights the desire for product in a
tightening Baltimore market.
Number of Buildings
4,828
Market Size
238,296,574 sf
Lease
Location
Submarket
Tenant
Amount Leased SF
9001 Whiskey Bottom Road
BW Corridor
Coastal Sunbelt Produce
244,500 sf
504 Advantage Way
Harford/Cecil
Gordon Food Service
235,000 sf
10621 Riggs Hill Road
BW Corridor
Fabrication Events
28,145 sf
7430 Montevideo Road
BW Corridor
Sunbelt Equipment
10,000 sf
Sale
Location
Submarket
Price
PSF
Building Size SF
8730 Greenwood Place
BW Corridor
9,900,000
$81.48
121,500 sf
516 Shaw Court
BW Corridor
$1,100,000
$146.67
7,500 sf
1701 Parkman Avenue
Baltimore City
$840,000
$68.35
12,290 sf

Full Market Report - MacKenzie Commercial Real Estate

Transcription

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